Uniper selling French energy business; Rothschild advises
05 SEP 2018
German energy company Uniper [ETR:UN01] is auctioning its French business with Rothschild advising on the process, two sources briefed on the matter said.
In August, the company stated that it would have to review its entire business in France if a government-planned shutdown of coal-fired power plants were implemented. President Macron has called for coal-free power by 2021.
Uniper has already addressed the challenges with the early coal exit in France on August 7 in the course of its 1H18 results presentation, a Uniper spokesperson said.
The announced decision of the French government about an anticipated coal exit has radically changed Uniper France’s business plan, which needs to be reviewed as well as the development of Uniper’s strategy in France, the spokesperson said.
The strategic review of Uniper’s business in France is at an early stage and will be communicated in due course, the spokesperson added.
The vendor has conducted a quiet auction process, the two sources said. The auction has progressed into the second round, the first source said, though the identity of indicative bidders has yet to emerge.
The business could be valued at over EUR 500m, both sources said. The sale comprises Uniper’s entire French business, which includes two gas fired power plants, two coal fired plants, a biomass plant, and around 100MW of renewable capacity, and a small customer business, the first source said, and could fetch as much as EUR 700m.
Uniper owns about 2.1GW of installed capacity in France, of which 1.2200 MW are coal, according to reports. The company owns units in the 1.4GW Emile Huchet hard coal and gas plant in the Lorraine region, and coal and biomass units at the Provence plant in Meyreuil, as well as 84MW of onshore wind capacity, and 10.5MW of solar photovoltaic, according to its website. Its customer focused business is geared towards large companies, small and medium-sized enterprises, municipal customers, and public organisations.
This asset mix could make the sale difficult, both sources said. The presence of coal in particular will dampen buy side interest, the sources said. The wider political momentum is for the reduction of CO2 emissions, and in that context these assets will not be popular, the second source said.
Strategic bidders are unlikely to participate, this source said, despite recent deals in the space such as Total’s [EPA:FP] pending acquisition of Direct Energie [EPA:DIREN], and subsequently acquiring a suit of gas fired power plants from KKR.
However, the sale could be of interest to financial investors, the second source said. These could find value in using the plants as flexible power generation to support intermittent renewables and nuclear sources, this source added.
Volatile weather conditions, such as the extreme cold of last winter and extreme heat of this summer, demonstrate the need for grid balancing, the source added.
Rothschild did not respond to a request for comment.